The Internet of Things (IoT) Market in Japan

The Internet of Things (IoT) is a network of physical objects, systems, platforms and applications that contain embedded technology to communicate and share intelligence with each other, the external environment and with people.

The IoT market is supported by various growth drivers, surging a demand of collaborative robots and boosting economic growth. The rise of Lower Power Wide Area (LPWA) network technology, rising IoT platforms, as well as application and security spending are factors that are driving the IoT market.

The global IoT Market is a fast growing one. According to a recent study published by Market Research Future, it is forecasted to see slow, steady growth by 2020. During the projected period of 2016-2022, there will be a surplus growth at a moderate Compound Annual Growth Rate (CAGR).

Japan is a highly developed economy with a booming telecom industry. Its development of the IoT embodies Japan’s obsession with robotics and other cutting-edge technologies, as well as reflects a practical means of coping with its aging population through reduced human resource costs.

IoT applications began in Japan at a slow grind, with minimal hype. Today, there are more than 3.17 million individual IoT (SIM card) subscriptions in Japan. NTT DoCoMo has more than 1.5 million users, coming mostly from transportation, surveillance, remote payment (including vending machines), logistics assistance, and remote metering sectors. KDDI, meanwhile, has focused on high-speed, large-capacity IoT communications from the very beginning and has acquired more than one million users in the transportation and logistics sectors through in-vehicle, small scale, lightweight and low-cost IoT communications services. SoftBank, which is a relatively recent telco entrant, has little more than a quarter million subscriptions. Most of its relevant products involve consumer electronics, along with a small number of elevator surveillance and vending machine device services.

Japan’s telecom industry has high hopes for the IoT. It is expected to explode in sectors like telemetering, transportation management, e-payment, surveillance, digital signage, and data backup. This brings huge business opportunities by creating new potential growth areas in an already saturated Japanese mobile market.

Applications

Japan’s most popular IoT services currently involve vending machines, transportation management, surveillance and e-wallet services. Most of the IoT applications, such as billing and payment, do not consume much bandwidth. In fact, more than half are supported by 2G networks, and for those that require 3G support, 384 Kbps is sufficient.

The Future

Japanese telcos expect IoT-related video applications to multiply as remote diagnostics and medical training become more commonplace. Remote video surveillance for transmission lines, emergency repair monitoring, scheduling and control will be required for any smart power grid. Video-based city security surveillance and management will be common in all smart cities. LTE, with its superior capacity, will better support such real-time IoT of tomorrow.

While still committed to industrial development, Japanese telecommunication companies believe that IoT applications can be scaled up quickly for consumer products such as digital photo frames, e-books and electronic pet collars. To promote IoT growth, Japan’s communications industry is working to adjust its current business model. IoT subscriptions are expected to grow by 8 million over the next three years.

Lessons

On a general note, Japan’s approach to IoT has yielded a lead over the West. Some lessons drawn from Japan are:

The Internet of Things enables operators to create new revenue sources in an already fiercely competitive mobile market.

Successful IoT promotion requires both technical and business model innovation. A flexible business model can be employed to stimulate cooperation between actors in the value chain.

IoT developers must respect the industrial standards already in place; they should also focus on communications access layer services for the Internet of Things as well as M2M modules and service gateways to facilitate operational management and maintain core competitiveness.

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